Czech opposition parties plan lower 2022 budget deficit after election win

PRAGUE (Reuters) – Czech opposition parties seeking to form a new government will aim to rework the 2022 budget to cut the planned deficit to below 300 billion crowns ($13.72 billion), a top party leader said on Sunday.

Petr Fiala, leader of the centre-right coalition Together which defeated Prime Minister Andrej Babis’s ruling ANO party in an Oct. 8-9 election and plans to form a new government with the Pirate/Mayors group, told a Czech Television debate show that they would reject the current administration’s budget plans.

That means the budget is unlikely to be approved before year-end, causing the country to revert to a provisional plan that limits discretionary spending. Fiala said a provisional budget for up to two months would not cause a problem.

Babis’s government has proposed a 376.6 billion crown deficit in 2022, similar to the record gap seen in 2020 after the start of the coronavirus pandemic and the expected gap seen in 2021 as spending stays high.

“A deficit like this is not possible,” Fiala said. “We have to count on a provisional budget, but of course it is in everybody’s interest to have the amended budget accepted at the soonest.” He said changes could be done in weeks.

When asked if the 2022 deficit could be below 300 billion crowns, Fiala said he would like ministries to seek operational savings of around 6%, which he said could cut the deficit by almost 100 billion crowns.

Fiala said the parties making up the future administration did not want to raise taxes as part of their plans.

Babis’s government has faced criticism for driving up budget deficits and state debt with a record income tax cut and pension and public wage hikes on top of pandemic spending. ($1 = 21.8710 Czech crowns)

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